About TLB

Philip Jessup proposed the idea of a transnational law course. His vision of the subject was broad, including public and private international law; state and non-state actors; business, administrative, and political affairs; as well as negotiation and litigation. Inspired by his idea, TLB is only constrained by its pursuit to address all law transcending national frontiers.

October 26, 2009

Sri Lanka and Trade Policy: Concession or Sanction?

The European Union last week
produced an official
notice derived from its year-long investigation on human right violation in
Sri Lanka. Here are the Commission's final report, and the independent expert's report.
Given the Commission's conclusion that Sri Lankan government breached its human
rights commitments during it 25-year civil war with the Tamil Tiger, the
country is set to loose its trade concessions, known as GSP Plus, to the European Union, a sanction
which will cost the country more than $100m
trade benefits. Mr. Rajapaksa’s government has
recently secured a $2.6
billion loan from the IMF with very little strings attached despite some
delay due to international pressure and warnings of human rights violation in
April and May.

From the European Commission:

The Commission has completed a thorough investigation into the
human rights situation in Sri Lanka and in particular whether Sri Lanka is
living up to the commitments it made to respect international human rights
standards when it became a beneficiary of the European Union's GSP+ trade
incentive scheme which provides for additional trade benefits.

The report comes to the conclusion that there are significant
shortcomings in this area and that Sri Lanka is in breach of its GSP+ commitments.

We will now consult with Member States on whether to prepare a
proposal with a view to temporarily suspending these additional trade benefits.

In response to the Commission’s
announcement, Financial Times Editorial responded
with a legitimate defense for Sri Lanka by emphasizing the inherent purpose of
trade preferential treatments, which has been a successful economic instrument to
lower many countries’ poverty line.

Sri Lanka is threatened with losing its trade
rights because of human rights abuses committed by its government in the course
of the conflict with
the Tamil Tiger rebels. Such violations are well documented and
abhorrent. But it is perverse to punish the clothing industry and other
exporters for the actions of security forces they cannot control. In extremis,
trade restrictions are a legitimate means to isolate the most vile abusers of
human rights, particularly when an authoritarian government controls the entire
country and its economy. That is not the case here. Sri Lanka is not Burma.

Using trade as
a strategic tool makes the global trading system hostage to endless political
posturing and negotiating games. Governments should grant trade preferences on
simple, fair criteria, largely based on the poverty and vulnerability of
trading partners. Trade deals should be a means for poor countries to haul
themselves out of poverty, not a tool of foreign policy manipulation by their
richer counterparts. Sri Lanka’s exporters have used their access to the
European market well. They should keep it.

I wrote
about my trouble of justifying this civil war as well as concern over human
right violations in Sri Lanka early this summer, and thought that leaders of
both the Tamil Tiger and Mahinda Rajapaksa’s government should be charged for war crime violations
of international humanitarian law including unlawful killings of civilians
particularly children and young men as well as forcing child soldiers. However, the removal of GSP Plus to publicly punish Sri Lanka and its people instead of the government, as
argued by the Financial Times, seems unjustifiable ex-post. The penalty is
estimated to cause more than 2% contraction of Sri Lanka’s troubling economy
alone. Separating trade policy from politics and diverging international
alliances (Sri Lanka, Iran, China versus other Western countries) is much
harder than it sounds. Nevertheless, Sri Lankan workers and exporters should be
excluded from international sanction against the country’s military government,
while other available legal instrument, i.e. charge for violation of
humanitarian right, remains a better tool for the purpose of punishment and
deterrence.